Fed rate cut in doubt this week? Powell faces rare internal opposition

[BlockBeats] On December 9, the Fed’s final rate-setting meeting of the year will take place on Tuesday. This meeting is a bit different—possibly half of the voting members are not optimistic about a rate cut.

But don’t forget, Powell has the final say. Even with rare internal disagreements, he seems determined to push this rate cut through.

Now everyone is watching one thing: can Powell win over the opposition and keep dissenting votes within an acceptable range?

The market’s widely expected scenario is this: a 25 basis point rate cut, bringing the range down to 3.5%-3.75%. Immediately after, the post-meeting statement will take a sharp turn, signaling that further rate cuts will have a much higher bar.

The data is interesting. Of the 12 voting members, at least 5 have publicly stated they see no need for a rate cut. If you expand that to all 19 members, the number doubles to 10. But at the last rate cut in October, only 1 member actually voted against it (another thought the cut wasn’t big enough).

Last month’s release of the lagging September nonfarm payroll data made the decision even harder. Job growth beat expectations, but the unemployment rate jumped to 4.4%, the highest since the end of 2021. Even worse, August data was revised down to show negative growth.

The key question is: is the employment slowdown because companies don’t want to hire anymore (supports a rate cut), or is it because fewer immigrants mean there are fewer available workers (argues against a rate cut)? This judgment directly determines whether a rate cut is justified.